SEC Charges Convicted Criminal Who Conducted Fraudulent ICO Using a Fake Identity

January 18, 2020/US SEC

The Securities and Exchange Commission today charged convicted criminal Boaz Manor, his business associate, and two businesses, CG Blockchain Inc. and BCT Inc. SEZC, with raising over $30 million from hundreds of investors in a fraudulent initial coin offering (ICO).

According to the SEC’s complaint, between August 2017 and September 2018, the defendants marketed and sold digital asset securities in a purported effort to develop technologies for hedge funds and other investors in digital assets. As alleged, Manor, a resident of Toronto, Canada, darkened his hair, grew a beard, and used aliases to hide his identity and conceal the fact that he had served a year in prison after pleading guilty to criminal charges arising from the collapse of a large Canadian hedge fund. According to the complaint, Manor portrayed his New Jersey-based associate Edith Pardo as the owner of the businesses, and presented himself as an employee of hers named “Shaun MacDonald.” Manor allegedly admitted to certain investors that he concealed his identity because its disclosure would result in “the company being destroyed.” The complaint alleges that the defendants claimed to have 20 hedge funds testing technology to record transactions on a distributed ledger or blockchain. In reality, the defendants had only sent a prototype to a dozen funds, and none of the funds used it or paid for it.

“Learning about the identity and background of the individual or individuals behind a venture is one of the first things we tell investors to do before trusting anyone with their money,” said Joseph G. Sansone, Chief of the SEC’s Market Abuse Unit. “As alleged in our complaint, Manor’s brazen scheme to conceal his identity and criminal history deprived investors of essential information and allowed the defendants to take over $30 million from investors’ pockets.”

In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Manor, a dual citizen of Canada and Israel, and Pardo, an Israeli citizen.

The SEC’s complaint, filed in federal court in New Jersey, charges Manor and Pardo with violating the antifraud and securities registration provisions of the federal securities laws and seeks disgorgement of ill-gotten gains plus interest, penalties, and injunctive relief. The SEC also seeks orders barring Manor and Pardo from acting as officers or directors of public companies and from participating in future securities offerings.

The SEC’s investigation, which is continuing, has been conducted by Tracy Sivitz, Jordan Baker, and Sandeep Satwalekar of the SEC’s New York Regional Office and by Ann Marie Preissler and Simona Suh of the SEC Enforcement Division’s Market Abuse Unit. The case has been supervised by Lara Shalov Mehraban of the New York Office and by Mr. Sansone. The SEC’s litigation will be led by Ms. Sivitz, Ms. Preissler, Mr. Satwalekar, and Ms. Suh. The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of New Jersey, the Federal Bureau of Investigation, the Ontario Securities Commission, the Israel Securities Authority, the Hong Kong Securities and Futures Commission, and the Bank of Lithuania Supervision Service.

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